ESG-driven lending
1. How we ESG screen all of our loans:
In collaboration with Longevity Partners, we have developed bespoke scorecards across all of our loan products which screen each loan for:
- Good Governance practices;
- Environmental KPIs and building sustainability; and
- Social value creation.
Our screening results are then shared with our borrowers in order that we can help them future-proof their assets against climate risk and incoming energy & carbon regulation.
2. How we structure Green Development Loans:
As part of our development loan product, we offer Green Developments Loans which aim to mitigate the increased costs associated with building low-carbon, environmentally sustainable homes by offering certain incentives.
Structure
Our Green Development Loans are structured utilising a specialist LMA Green Facility Agreement in order to document sustainability-linked KPIs and incentives.
Eligibility
We have developed a proprietary Green Criteria Framework specifically for residential housing developments. The framework assesses five environmental categories which cover the full project lifecycle, from design stage to end of life:
- Energy & Carbon
- Circular Economy
- Biodiversity
- Water
- Health & Wellbeing
Projects are scored against these categories, and borrowers must meet a minimum qualifying score to be eligible.
We also accept projects qualifying for industry recognised certifications such as:
- LEED v4.1
- WELL
- BRE HQM
- Next Generation
Tailored ESG KPIs
Once a Green Development Loan is screened, KPIs aligned with the Borrower’s targets for the building/scheme will be set. These will be monitored by our experienced loan management team.
Incentives
We incentivise the achievement of pre-agreed environmental performance targets through rate ratchets, exit fee discounts or other financial incentives appropriate to the project.
3. External Green Advisory
Specialist advisory is provided by Longevity Partners, who we consult on every loan. Longevity help us evaluate prospective and completed developments against our sustainability framework and work alongside our borrowers to provide support.
